The Bank of England’s Prudential Regulation Authority launched a consultation on its new pay rules which could see bonuses being clawed back six years after they have been paid if bankers “misbehave”, or if the bank enters a “material downturn” in financial performance.
Although these new pay rules appear to be harsh enough, this, when added to the fact that regulators are also looking at bonuses not vesting until five years after the date that they have been awarded, would mean they could be clawed back as much as 11 years later after they were paid!
If an employee and employer agree to this in an employment contract, then there is no reason why it shouldn’t be enforceable. However, there are a number of practical problems that I can see with these proposals:
The only thing for certain is that if these rules come into force, the lawyers are going to have a field day!